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Information aggregation in a large multi-stage market game

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  • Hu, Tai-Wei
  • Wallace, Neil

Abstract

A three-stage market-game mechanism is devised that is simple (actions are quantities and outcomes are determined by arithmetic operations that do not depend on details of the economy) and achieves efficiency in a two-divisible-good, pure-exchange setting with potential information-aggregation. After an entry stage, agents make offers which are provisional for all but a small, randomly selected group. Then, those offers are announced, and everyone else makes new offers with payoffs determined by a Shapley–Shubik market game. For a finite and large number of players, there exists an almost ex post efficient equilibrium. Conditions for uniqueness are also provided.

Suggested Citation

  • Hu, Tai-Wei & Wallace, Neil, 2016. "Information aggregation in a large multi-stage market game," Journal of Economic Theory, Elsevier, vol. 161(C), pages 103-144.
    • Handle: RePEc:eee:jetheo:v:161:y:2016:i:c:p:103-144
    DOI: 10.1016/j.jet.2015.11.005
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Mechanism-design; Information-aggregation; Market-game; Efficiency;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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